Just the Facts: Setting the Record Straight on Crude Oil Exports

As momentum grows to lift the ban on U.S. crude oil exports, opponents are working overtime to spread misinformation about the impacts of lifting the ban. However, their claims quickly fall apart when compared against the large body of independent research and analysis from government agencies, universities, thought leaders and think tanks from across the political spectrum.

Below we look at the five most common myths being spread by those who oppose crude oil exports.

FACT: U.S. crude oil exports will have a negligible impact on global carbon emissions due to the fact that U.S. crude oil exports would largely serve as a substitute for other global sources of supply from places like Iran. Additionally, in terms of global oil production, the United States has the most robust environmental regulations in the world, meaning that oil produced here is done to the highest standards of safety and environmental responsibility.

FACT: Policymakers in the Obama Administration and in Congress are well aware of our strong environmental standards.

John P. Holdren, senior adviser to President Obama for science and technology: “If you’re going to be using oil and gas, it’s better to produce it here than somewhere else. We have by far the strongest environmental and safety oversight of any country.”

Mark Warner, U.S. Senator from Virginia: ““The notion of increasing America’s energy output and at the same time not stepping back from our commitment to take on the very real threat of climate change are in no ways contradictory… The World is using a certain amount of hydrocarbons. I candidly believe that American hydrocarbons are both extracted in a cleaner, more efficient way than Venezuela, than Russian…I believe you’re talking here about substitution, not increasing, carbon footprint.”

FACT: There were approximately 32 gigatonnes of global carbon emissions in 2014. Allowing U.S. oil exports will not materially affect global carbon emissions. Energy and Environment scholar Benjamin Zycher made this point while responding to questions at a Senate Banking Committee hearing: “In the context of this hearing the effect of the impact of ending the export ban in terms of climate change issues, which is an issue you have raised, is literally zero.”

Myth # 2: Crude oil exports will cost U.S. jobs.

FACT: No credible economic analysis exists today in support of this claim. In fact, the current pricing environment – exacerbated by the oil export ban – is resulting in a reduction in oil industry jobs, the shuttering of steel mills and a reduction in tax revenue in oil producing states.

Just last week, Federal Reserve Chair Janet Yellen testified before the Joint Economic Committee that a swift and significant downturn in activity in the oil and natural gas industry is “one of the things holding back growth” in our economy. Over the past year, more than 200,000 Americans who work in the oil industry have lost their job. The best way to put these people back to work is to level the playing field by removing crude oil export restrictions.

FACT: A report by the Energy Information Administration concluded that domestic refiners would NOT be disadvantaged if the ban were lifted. It found that domestic refiners would continue to have a “significant advantage compared to offshore refiners” if the ban was repealed because of their access to much cheaper natural gas which is used as fuel in the refining process.

FACT: According to a number of economic analyses, repealing the ban on crude oil exports will generate considerable job growth across the exploration and production supply chain.

IHS Energy: “Total U.S. jobs increase due to free trade will be, on average, 394,000” while “peak job creation in 2018 is nearly 1 million… Lifting the ban supports economic activity across all states. A quarter of the additional jobs are in states that essentially produce no crude oil.”

ICF International: “The U.S. Economy could gain up to 300,000 jobs in 2020 when crude exports are allowed.”

Brookings: “Lifting the ban on crude oil exports from the United States will boost U.S. economic growth, wages, employment, trade, and overall welfare.”

Myth # 3: Crude oil exports will raise gasoline prices.

FACT: Numerous studies have concluded that repealing the ban on crude oil exports will put downward pressure on gasoline prices, which benefits consumers. How? Because U.S. gasoline prices are based on global oil prices. Repealing the ban would lead to greater U.S. oil production and an increase in the global oil supply, which would drive global oil prices down.

Energy Information Administration: “Petroleum product prices in the United States, including gasoline prices, would be either unchanged or slightly reduced by the removal of current restrictions on crude oil exports.”

IHS Energy: “Since US gasoline is priced off global gasoline prices, not domestic crude prices, the reduction will flow back into lower prices at the pump – reducing the gasoline price 8 cents a gallon. The savings for motorists is $265 billion over the 2016 – 2030 period.”

ICF International: Lowered prices as a result of the crude export ban “could save American consumers up to $5.8 billion per year, on average, over the 2015 – 2035 period.”

Congressional Budget Office: “U.S. consumers of gasoline, diesel fuel, and other oil products would probably benefit along with domestic oil producers, if the ban was repealed…”

Government Accountability Office: “A decrease in consumer fuel prices could occur because they tend to follow international crude oil prices rather than domestic crude oil prices, according to the studies and most of the stakeholders. If domestic crude oil exports caused international crude oil prices to decrease, consumer fuel prices could decrease as well.”

Brookings: “The increase in U.S. oil production makes world oil prices fall. Accordingly, so do U.S. gasoline and diesel prices, at least temporarily. This lowers the costs of production for all kinds of businesses and makes households better off.”

Myth # 4: Crude oil exports should not be allowed when the United States still imports 7 million barrels per day (bpd) of oil.

FACT: While accurate that the United States does currently import oil, what’s missing is the fact that we will continue to import these barrels given our domestic refining configuration, which is geared towards processing heavy and medium grades of crude. These heavy and medium grades are not produced in abundance in the United States and therefore have to be imported.

FACT: The U.S. shale oil renaissance has transformed the global energy economy. Over the past few years, until recently, we have all but eliminated imports of light crude oil. This speaks to America’s potential. Unfortunately, and as noted by the Energy Information Administration, some domestic refiners who process light crude oil have switched back to imported oil, leaving domestic producers without a market to sell their product given the current restrictions on crude oil exports.

Myth # 5: Crude oil exports will harm our national security.

FACT: Ending the export ban would enhance U.S. national security by providing greater stability to the global crude oil market, reducing price volatility and providing our allies with a reliable and secure supply of energy.

Former CIA Director and Defense Secretary Leon Panetta and former National Security Advisor Stephen Hadley explained the national security benefits in a recent Wall Street Journal column: “The U.S. has broken free of its dependence on energy from unstable sources…But our friends and allies, particularly in Europe, do not enjoy the same degree of independence. The moment has come for the U.S. to deploy its oil and gas in support of its security interests around the world.”

Former Secretary of Defense William Cohen also recently wrote in TIME: “By allowing the U.S. to become a stable source of supply to global energy markets, counteracting supply disruptions that will inevitably affect other energy-rich regions, President Obama and Congress can double down on promoting long-term economic growth and reinforcing U.S. foreign policy leadership.”

Former National Security Advisor to President Obama Tom Donilon told Platts: “The US has consistently opposed efforts by countries to manipulate their exports…By allowing exports, we permit production decisions in the United States to be made fully on the basis of market forces rather than being influenced by artificially imposed regulatory constraints…This in turn will increase diversity of supply, increase competition, reduce volatility and lower prices in global markets.”

Former Under Secretary of Defense for Policy Michèle Flournoy, the founder and CEO of the Center for a New American Security testified before congress, stating: “Lifting oil export restrictions will yield a variety of security dividends to the United States. First and foremost, allowing crude exports would further strengthen our economy – the foundation of our national security… Shoring up the United States’ economic position would, in turn, strengthen our ability to play a much needed leadership role in international security and economic affairs. And we should not underestimate the degree to which becoming an exporter could impact perceptions of the United States as a vital global power, helping to discredit erroneous narratives of U.S. decline.”